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Starting a new life in a new country can be expensive. You will need a place to live in, furniture, appliances, and other things necessary to live a comfortable life. In this period of adjustment, we hear many stories of newcomers falling deep into debt just a few months upon arriving in Canada. This happens when they have not adjusted their spending habits yet or they are not familiar with how financial instruments work here.

To avoid getting into this situation, here are eight tips to help manage your finances better:

Don’t be in a rush

We move to another country expecting to have a better life. Upon arriving, some would buy a house, a new car, appliances and furniture even before they have a stable job. While it is not wrong to have these things (especially if you can afford them), what is wrong is pressuring yourself to have them and then maxing out your credit card and getting loans left and right. You will find that the journey of getting out of debt will be much harder than sacrificing at the start and saving up for your goals. So go slow but steady, plan your expenses and do your best to save money. Having a comfortable life is much sweeter without debt weighing on your mind.

Set a budget

Setting a budget is the first step in taking control of your finances. This requires living within your means, knowing your priorities and keeping track of spending. The video below from the FCAC will help you see that small changes in your spending habits will amount to a big difference in your financial future:

Use your credit card wisely

Pay your credit card balance in full. Don’t pay just the minimum balance each month. If you only pay the minimum, it will take years to pay off your debt because of the interest.

Don’t get cash advance. Did you know that the interest starts immediately when you get cash advance from your credit card? Cash advances do not have a grace period similar to your regular credit card transactions. Interest computation starts from the time you made the withdrawal. Aside from this, some banks also charge cash advance and ATM fees.

Don’t get too many credit cards. Having too many credit cards will make you lose track of your spending. Limit it to one or two and make sure that you know the cut-off dates for your cards. This will help you schedule your expenses more cost-effectively.

Don’t charge things you can’t afford. Before you charge a purchase on your card, ask yourself: Can I afford this if I paid it in cash? If the answer is no, then you will be better off not buying it.

Track your spending

According to a survey, almost 1 in 3 Canadians are afraid to see their credit card bill come January. They also found that the majority of Canadians (61%) agreed with the statement “the holidays are the most stressful time of the year financially.” Aside from the social pressure of buying gifts during the season, Canadians incur a lot of debt because there’s Black Friday, Christmas and Boxing Day sales. These can make us focus more on the supposed “savings” and lose track of spending. To make the most out of these big shopping days, carry a list of what you need to buy. Do your best not to be distracted by other merchandise on sale. Don’t give in to impulse-buying. Remember, it’s not a good buy unless you need it.

Avoid “buy now, pay later” plans

Many companies offer buy now pay later plans for furniture, appliances and electronics. Buy now pay later is a financing plan that allows you to pay in installments, with low to even 0% interest. Some would even offer a grace period of six months to one year before payments start. Sounds like a great deal, right? It can be if you need the appliance urgently and you are disciplined enough to make the payments on time. Just know that the consequence for late payments can be enormous. The interest rate can go as high as 29% if you miss it even by a day. There could also be hidden fees for delivery, administration, or environmental fees. Should you wish to avail of a buy now pay later plan, read the fine print and make sure to pay on time and within the interest-free period.

Maintain an emergency fund

Urgent home repairs and health emergencies are unexpected expenses that you cannot forgo. To avoid making a dent on your credit card, or worse, getting a cash advance or withdrawing from your retirement savings, start an emergency fund. Read Do I really need an emergency fund? to know how to start saving for a rainy day.

Buy second-hand

There are some items that are better bought second-hand than brand new. Examples are exercise equipment, some electrical goods, clothing, textbooks and furniture. Buying second hand can give you enormous savings. Check out garage sales in the summer and fall all over the city, join buy and sell groups on Facebook, or register with Kijiji and similar sites. Don’t forget to inspect merchandise carefully before you buy. Make sure that they are functioning and are pest-free. Read Looking forward to garage sale season for more tips. If you need a safe place to meet a seller or buyer, go to a Winnipeg Police Buy and Sell Exchange Zone.

Invest

Take advantage of secure investments for your savings like a Tax Free Savings Account and other Registered Savings Plans to make your money grow slowly but surely. Ask your bank or credit union for investment options.

Community Resources

Attend the Managing your Money Workshop from New Journey Housing. This is a free workshop where you can learn about budgeting, avoiding scams, types of credit, investing, retirement incomes and many more.

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